As someone whose company engages is what is usually called "public-private partnerships" or PPPs, one would expect me to be an enthusiastic supporter of all such efforts. (As an aside, my company privatizes the operation, but not the ownership, of public parks and we are paid entirely by user fees and get not one single dollar of tax money.)

Now RTD has been forced to admit that two other lines being built by the same company won’t open on time. RTD claims that it saved money by entering into a public-private partnership for the line in what is known as a “design-build-operate” contract. In fact, it saved no money at all, but was merely getting around a bond limit the voters had imposed on the agency. If the private contractor borrows a billion dollars or so and RTD agrees to pay the contractor enough to repay the loan, the debt doesn’t appear on RTD’s books. Taxpayers will still end up paying interest in the loans, which actually makes it more expensive than if RTD had stayed within its debt limit.

Public-private partnerships work great if the private partner is funded out of the user fees collected for the project, such as a toll road or water system. The Antiplanner resents the way the transit industry has coopted the term, public-private partnership, because their kind of partnership works differently. Instead of being dependent on fares, the private partner gets a fat check from the agency each month–up to $3.5 million in this case–whether anyone rides the train or not. This means the private partner has little incentive to make sure the system is working. RTD has withheld a portion of the monthly payments until the problems are solved, but eventually the contractor will get all of the money.

The solution isn’t for the agencies to build the lines themselves. The solution is to completely avoid megaprojects that aren’t funded out of user fees. Without the discipline of user fees, everything that’s happening with the A line should have been expected.

Valley Metro, the agency that operates light rail and most bus service in the Phoenix area, has published its 2016 annual ridership numbers, and they are awful (the agency is on a july-june fiscal year). Over the past year, they have opened two extensions of the current light rail line, spending $o.5 Billion to extend the line 6.2 miles. So what did we get for this? Falling transit use.

To begin with, we must again look past Valley Metro's downright bizarre chartsmanship, where differences in bar length bear absolutely no relationship to the values graphed (just try to figure out the bar lengths for the last three years of light rail data).

We see that light rail ridership is up 9%. This appears low, given that the line and total investment were increased by about 33%, but the new extensions were not available for the whole year. My guess correcting for opening dates is that on a full year basis this represents about a 20% increase. For May, June, and July light rail ridership has been running 19%, 26%, and 20% above the same month last year (before either extension was opened). This is well below the increase in line length (31%) and line total investment (36%)

I have always argued that the first 20 miles of the light rail line cut through the densest part of the city, including the downtown area (such that it is), the two highest visitation sports stadiums, and ASU -- and as such any future expansions were going to have a much harder time justifying themselves (ie, as in this case, a 31% expansion in length would yield something less than 31% increase in ridership). Light rail supporters have argued in return that I had things exactly backwards, that network effects would mean that ridership increased faster than route length. My sense is that this argument will pretty clearly tip in my direction by the time we have 2017 data.

By the way, with total investment up to over $2 billion and average weekday round trip ridership at about 23,500 in fiscal 2016, then the total capital cost (not including annual operating subsidies) of the line sits at about $85,000 per round-trip rider. Whenever Valley Metro supporters defend the line against my attacks, they will often quote various riders saying how much they love it. Of course they do! They damn well should love it -- we taxpayers spent $85,000 for each one of them to open the line AND subsidize every single one of their rides.

But if you really want to see the cost of these subsidies, look at the bus and total transit ridership in the chart above. Total transit ridership in the area has fallen to the lowest point since before the light rail line was first opened, despite the fact the city it serves is still growing. This is because bus ridership has fallen off the map. Just last year, for every 1 rider gained to the light rail line expansions, 3.6 were lost on busses. To see how far bus ridership has fallen, you have to go back further than the chart above shows. Here is an older Valley Metro chart I annotated for a previous article:

You can see from this that bus ridership in Phoenix fell to a level we have not seen since 2003! This is despite the fact that the Phoenix MSA has added about a million people since that time.

As it does in every city, light rail costs are starving the rest of the transit system. By shifting transit dollars into a mode that requires 10x more money to move a single passenger, the numbers of passengers served has to fall. You can see from the chart that Phoenix transit ridership was rising steadily from 1997 to 2009. But once light rail was completed, transit ridership absolutely stopped growing, despite population increases and large increases to total transit budgets. Without light rail, we might very well have seen transit ridership as high as 90 million today, if past ridership growth trends held.

My point was that the huge amount of money spent on light rail, which essentially constituted a single commuting route in this enormous and spread-out city, was cannibalizing bus service. The cost and investment to carry a light rail passenger is at least an order of magnitude greater than that needed to carry a bus passenger, and no public system can long endure this sort of cost increase to shift passengers from a relatively cheap transit mode to an expensive one. Inevitably, bus service (which mainly benefits the poor) is terminated to pay for the train (which benefits middle and upper class riders who would not be caught dead on a bus). I am pretty sure the train would have been harder sell if they had been honest and said that they were going to have to cut bus service for the low-income working folks so that ASU students and Arizona Diamondbacks and Phoenix Suns fans could have a better way to get to the ballgame.

Anyway, Valley Metro has updated the chart for 2015 and it continues to look bad:

They were smart to cut off history on this one so you can't see how they killed the growth trend with the advent of light rail. But you see that total transit ridership fell, with a small fall in light rail ridership and a huge fall in bus ridership. Oops. As an aside, they still have not fixed their terrible chart plotting. You can see this years bar for light rail being longer than the one for 2013 despite the fact the number is lower.

The 2016 numbers will be interesting. Since 2015 they will have opened several light rail extensions and got themselves a huge new tax increase approved (over my stern opposition).

Update: In retrospect, the bus ridership fall was significant but "huge" probably is an exaggeration. I was fooled by looking at the bar lengths, which again seem to have nothing to do with the actual data. They are clearly drawing this manually -- no automatic charting program would get it this wrong.

Readers will know that this is one of my favorite topics on this blog, how huge investments in showy rail projects that amp up the prestige of government officials tend to cannibalize lower cost bus service and, at the end of the day, actually reduce total transit ridership. The LA Times almost sortof recognizes this, and Randal O'Toole is on the case:

“Billions spent, but fewer people are using public transportation,” declares the Los Angeles Times. The headline might have been more accurate if it read, “Billions spent, so thereforefewer are using public transit,” as the billions were spent on the wrong things.

The L.A. Times article focuses on Los Angeles’ Metropolitan Transportation Authority (Metro), though the same story could be written for many other cities. In Los Angeles, ridership peaked in 1985, fell to 1995, then grew again, and now is falling again. Unmentioned in the story, 1985 is just before Los Angeles transit shifted emphasis from providing low-cost bus service to building expensive rail lines, while 1995 is just before an NAACP lawsuit led to a court order to restore bus service lost since 1985 for ten years.

...

Transit ridership is very sensitive to transit vehicle revenue miles. Metro’s predecessor, the Southern California Rapid Transit District, ran buses for 92.6 million revenue miles in 1985. By 1995, to help pay for rail cost overruns, this had fallen to 78.9 million. Thanks to the court order in the NAACP case, this climbed back up to 92.9 million in 2006. But after the court order lapsed, it declined to 75.7 million in 2014. The riders gained on the multi-billion-dollar rail lines don’t come close to making up for this loss in bus service.

...

Los Angeles ridership trends are not unusual: transit agencies building expensive rail infrastructure often can’t afford to keep running the buses that carry the bulk of their riders, so ridership declines.

Ridership in Houston peaked at 102.5 million trips in 2006, falling to 85.9 million in 2014 thanks to cuts in bus service necessitated by the high cost of light rail;

Despite huge job growth, Washington ridership peaked at 494.2 million in 2009 and has since fallen to 470.4 million due at least in part to Metro’s inability to maintain the rail lines;

Atlanta ridership peaked at 170.0 million trips in 2000 and has since fallen nearly 20 percent to 137.5 million and per capita ridership has fallen by two thirds since 1985;

San Francisco Bay Area ridership reached 490.9 million in 1982, but was only 457.0 million in 2014 as BART expansions forced cutbacks in bus service, a one-third decline in per capita ridership;

Pittsburgh transit regularly carried more than 85 million riders per year in the 1980s but is now down to some 65 million;

Austin transit carried 38 million riders in 2000, but after opening a rail line in 2010, ridership is now down to 34 million.

I will add that total transit ridership has been totally flat in Phoenix after construction of a major light rail project. The project's total cost is approaching $2 billion as they slowly add on short extensions, but this amount did nothing but cannibalize bus ridership. In fact, the situation is worse than this, since before light rail was built, Phoenix transit ridership was growing rapidly every single year, so in fact light rail actually likely reduced ridership by about 14 million. The whole story is here. (I will have an update in a moment but they have updated the chart from that article and ridership fell yet again in 2015).

This is one of those questions that seems like a no-brainer -- a bunch of people are sharing a ride, so they must be saving energy. When asked this question, we all think of a full bus or train of people vs. the number of cars that would have carried the same people.

The key issue turns out to be occupancy -- how full is the train or bus. And it turns out that occupancy is probably lower than most people think. That is because everyone rides on buses or trains as they commute -- they are going in the direction of most people's travel at the time of day they travel, so the transit is totally full. But no one thinks about those trains having to go back the other direction, usually mostly empty. As a result, we get to this fact, from the National Transit Database as synthesized by Randal O'Toole.

2014 Energy Use per Passenger Mile

Transit: 3141 BTU

Driving: 3144 BTU

Valley Metro Rail here in Phoenix does better, at a reported 1885 BTU per passenger mile. As reported many times here on this site, the cost of building this rail line, now well over one and a half billion dollars, would easily have bought every round trip rider a new Prius, with a lot of money left over. This would have saved more energy as well. Buses in Phoenix are averaging just over 6000 BTU per passenger mile.

The AZ Republic has some of the first information I have ever seen on the nature of Phoenix light rail ridership. The first part confirms what I have always said, that light rail's primary appeal is to middle and upper class whites who don't want to ride on the bus with the plebes

Light rail has changed the demographics of overall transit users since the system opened in 2008, according to Valley Metro.

Passengers report higher incomes than bus riders, with more than a quarter living in households making more than $50,000 a year. Many riders have cars they could use.

The 20-mile system running through Phoenix, Tempe and Mesa recorded more than than 14 million boardings last year. Still, census data estimate less than one-third of 1 percent of Phoenix commuters — or about 2,000 people — use rail as their main transportation to work.

.0033% huh? If we built similar facilities to serve everyone, it would only cost us about $420 billion at the rate of $1.4 billion per third of a percent.

But I thought this next bit was the most startling. I always had a sneaking suspicion this was true but never have seen it in print before:

While the much larger bus system reaches most corners of the Valley, light rail connects specific destinations along a single line. Nearly half of light-rail riders are enrolled in college.

I must have missed this in the original sales pitch for the light rail line: "Let's pay $1.4 billion so ASU students can get to more distant bars." Note that by these numbers, students likely outnumber commuters 10:1. Doesn't bode well for light rail extensions that don't plow right through the middle of the most populous college campus in the country.

Postscript: They don't break out people riding to get to sporting events downtown, but sporting events make up most of the largest traffic days on the system. From my personal acquaintances, many people use light rail as a substitute for expensive downtown parking at sporting events, parking (often semi-illegally) near light rail stops and taking the train the rest of the way in. On the whole, its not very compelling as a taxpayer to be helping to subsidize someone else's parking. And from a municipal fiscal standpoint, it means that light rail fares may be cannibalizing (on a much greater ratio than 1:1 given the price differential) parking fees at municipal parking lots.

I was reading this article in the Arizona Republic (which is generally an unskeptical cheerleader for light rail investments) and looking at the claim that Valley Metro (the operator of Phoenix light rail) had a 45% fare recovery ratio in 2013. One would think that means that their fares cover 45% of their costs -- which would be awful for any real enterprise but is pretty good for government-run rail systems.

But in fact, Valley Metro (along with rail supporters in the Administration) stack the deck by defining most of the costs out of this metric so it looks far better than it really is. In fact, by my reading of their financial statements, the true fare recovery is at best 15.2% and likely much worse.

Look at their costs of $75+ million and fares of about $12.8 million. How do they get to 45%? Simple -- they leave the majority of their costs out. They exclude administrative costs, financing costs, and depreciation (essentially their capital cost) from the equation. This means that their fare recover is 45% -- IF you ignore their large administrative costs and you ignore the $1.4+ billion the line cost to build. Further, because of the way the government does its finances, it is also missing any financing costs (interest and such on debt).

So the true cost recovery, stated in a way that a reasonable person would think about such a number, is 16.8% at best. If one takes into account the $8.28 million in "non-operating expenses" the number is 15.2%. And it is even lower if you were to include interest and other financing costs.

I am sure Valley Metro will argue that this is the way the Feds measure it. I don't care. It has an obligation to accurately report its financial position to the public who is paying for it, particularly when the public is considering further investments in the form of higher taxes. The 45% is a meaningless number that is crafted solely to make light rail look financial stronger than it really is.

Randal O'Toole and the Arizona Free Enterprise Club have weighed in with a comprehensive report on Phoenix's Prop 104 transit tax, and the results are ugly. A few findings:

The oft-repeated claim that light rail has generated $7 Billion dollars in economic development is simply untrue. In fact, many of the projects included in this claim have never been built (like the Sycamore Station development) or involve projects that have nothing to do with light rail (such as the $600 million Convention Center Expansion, which was funded largely by state tax dollars).

The main beneficiaries of the transit plan appear to be contractors and developers who have projects near rail stations. The tax revenue from the plan combined with the generous subsidies offered to select developments ensures that this plan will benefit a few contractors and developers at the expense of others.

The plan is unbalanced and ignores vehicle street improvements. Despite the fact that only 3% of the population uses transit (less than 1% use light rail), 95% of the funding in the plan goes toward expanded bus and rail service. Only 3% goes toward vehicle street improvements.

Transit ridership actually fell after the light rail opened. From when light rail opened in 2009 through 2014, any gains in light rail ridership were offset by the loss of more than one bus rider. Ridership is still 1.2 million less per year than it was in 2009.

The transit plan as proposed will increase traffic congestion, energy usage and greenhouse gas emissions. In fact, the transit plan will use more

Coyoteblog readers will be totally familiar with this statement from the report about light rail merely cannibalizing bus riders, echoing past articles I have had saying the same thing:

According to the city of Phoenix and Valley Metro, light rail is a great success in Phoenix, generating a 42-percent increase in transit ridership since 2001 and stimulating the construction of $7 billion in new real estate development along its route. A close look, however, reveals that both of these claims are wrong.

The increase in ridership took place between 2001 and 2009, the (fiscal) year that the light-rail line opened. Since that year, for every light-rail rider gained, the region’s transit systems lost more than one bus rider. Per capita transit ridership has declined by 8 percent since 2009 partly because the high cost of light rail forced a 34-percent increase in average bus fares by 2010 and an 18-percent decrease in bus service by 2013.

You can see this perfectly well from a chart right off of our transit authority's web site (except for my annotation in red), which I discussed in depth here.

It is just incredibly disingenuous that light rail supporters are trying to claim credit for transit ridership increases that occurred before the line was built and whose growth the line essentially halted.

Another claim the report demolishes is that light rail is somehow spurring development. Supporters claim $7 billion of light rail development planned or built along the line, but oddly enough that is the exact same figure they were touting almost 8 years ago before the line was even completed. Doesn't seem like they are getting much traction, huh? In fact, the list actually shortens with every year as projects get cancelled and no new ones are added. But beyond this, simply adding up development along the line and claiming that it is all incremental to the line's construction is simply moronic, the same facile BS analysis often used to support publicly funded football stadiums. The obvious questions are:

How do they know this development is incremental, and not development that would have occurred anyway? In particular, this line was built through the three of the largest pre-existing development hubs in the metropolitan area (North Central Ave, Downtown Phoenix, and Tempe/ASU). There was always development activity in these areas, and always going to be

Much of the new activity they cite is near Tempe Town Lake, and I would give that project, not the rail, much of the credit. The city did a marvelous job (see, I can give props to government once in a while) converting a big wide ugly dry ditch into a lake that is the centerpiece for business and condo development

Much of this development is subsidized by various government programs. It is impossible to separate the effects of the subsidy from the rail line.

Finally, if you don't believe me about the relative costs of the two modes, let's take a look at the number from Phoenix's own plan. They speak for themselves:

So what does one get for the 5x higher operating costs and 134x higher capital costs of light rail over buses? Well on the negative side, one gets a system that is substantially less flexible and responsive to changes. The only positive I can come up with is that middle and upper class white people consider buses low class and want a transportation mode of their own.

I am increasingly convinced that the appeal of streetcars and light rail has everything to do with class. From any rational perspective, these systems make no sense -- they are 10-100x more expensive than buses and lack the flexibility that buses have to adjust to shifting demand patterns over time. A single extra lane of highway adds more capacity than any light rail line.

Streetcar's single, solitary advantage is that middle and upper class whites who would not be caught dead on a bus seem to be willing to ride streetcars. I don't know if this is because of some feature of the streetcars (they are shiny and painted pretty) or if it is some sort of self-segregation (the upper classes want to ride on something that is not filled with "riffraff").

Anyway, Reason has a really good video on streetcars, which covers a lot of topics from cronyism to the class issues I mention. And the film of the incredibly poor design of the DC streetcar has to be seen to be believed. (via Maggies Farm and their great daily links page)

The hefty sales tax that funds Phoenix light rail deficits is about to expire, and as is usual, politicians not only don't want it to expire but they want to double it so they can build more over-priced rail lines.

One of the reasons that stuff like this is so hard to fight is a phenomenon called "concentrated benefits but dispersed costs." This means that, particularly for certain crony handouts, the benefits accrue to just a few actors who, due to the size of these giveaways, have a lot of financial incentive to promote and defend them. The costs, on the other hand, are dispersed such that the final bill might only be a few dollars per taxpayer, such that no individual has much incentive to really pay up to support the fight.

A great example of this is sugar tariffs. These raise the price of sugar (as well as reducing our choices and effectively promoting imperfect substitutes like HFCS) so we as consumers should all fight them. But the higher cost of sugar might only cost us, say, $20 each a year individually. Are you really going to donate $100 in a political cause to save $20? On the other side, these tariffs create millions and millions of dollars in profit for a few sugar producers, such that they have a lot of money and incentive to spend big on lobbying to keep the tariffs in place.

Construction companies, engineering firms and transit service providers are the biggest early supporters of the Proposition 104 campaign to expand Phoenix transportation, while the group fighting the proposed tax increase still seeks major funding.

The MovePHX campaign, supporting the bus, light rail and street improvement plan going before city voters in August, raised $382,900 from March through the end of May, according to finance reports filed Monday.

Opposition group Taken for A Ride — No on Prop 104 received just under $417 from individuals over the same period. A second campaign committee opposed to the proposition formed after the contribution reporting period ended....

More than half of the contributions to the MovePHX campaign during the reporting period came from engineering, design and construction firms, including many that were hired for design and consultation on the Valley's first stretch of light rail.

The largest single donation came from We Build Arizona, a group of engineering, contracting and transit organizations that donated $125,000 to the campaign. TransDev and Alternate Concepts, Inc., which hold bus and light rail service contracts, contributed more than $35,000 combined.

A combined $30,000 came from police, firefighter and food and commercial worker union political action committees.

When 120,000 people head to downtown Orlando for the big July 4 fireworks show at Lake Eola, none will be getting on SunRail.

It’s not running.

Central Florida’s $1 billion commuter-rail line usually only operates Monday through Friday, and while a few special weekend events in recent months have booked the train, one of the biggest gatherings of the year won’t.

Fireworks at the Fountain, in addition to the sky show, will feature more than 25 vendors, live music and children’s activities.

But Orlando city staff researched the addition of SunRail service, but found it wouldn’t work, said Cassandra Lafser, the city’s public information officer.

“Several factors contributed to this decision, including safety, availability and costs,” Lafser said in a prepared statement.

So, even in a situation where capital costs are sunk and can be ignored, an incremental decision to operate the train on a very heavy commuter day makes no economic sense. You want to know why? Because it makes no economic sense Monday through Friday either. Light rail never pays back any of its capital costs, but the vast majority of light rail loses money operationally at the margin as well.

Patrick Everson has the first of a two-part series of editorials in the Las Vegas Review-Journal on light rail. In this first part, he is nice enough to refer to much of what I have written here about the problems with Phoenix Light Rail. You can find his editorial here.

As I have written before, Phoenix has seen its total transit ridership flat to down since it built its light rail line. This after years of 6-10% a year increases in ridership. Most cities, even the oft-worshipped Portland, have seen the same thing. Here is the chart for Phoenix (if you look closely, you can see how they fudged the bar scaling to make light rail ridership increases look better).

The reason is that per passenger, or per mile, or per route, or whatever way you want to look at it, rail systems are 1-2 orders of magnitude more expensive than buses. Since most cities are reluctant to increase their spending on transit 10-100x when they build trains (and to be fair, proponents of rail projects frequently make this worse by fibbing about future costs and revenue expectations), what happens is that bus routes are cut to fund rail lines. But since buses are so much cheaper, 10 units of bus capacity, or more, must be cut for each one unit of rail capacity.

The city and state officials who promoted construction of Honolulu’s rail transit line now admitthat they don’t know how they are going to pay for the cost of operating that line. Between 2019, when the first part of the line is expected to open for business, and 2031, those costs are expected to be $1.7 billion, or about $140 million per year. In 2011, the annual operating cost was estimated to be $126 million a year.

Honolulu has about a hundred bus routes, which cost about $183 million to operate in 2013, or less than $2 million per route. The rail line will therefore cost about 70 times as much to operate as the average bus route.

So they have budgeted no money for operations, and are probably underestimating net operating costs as their revenue projections, as discussed later in the article, are transparently over-optimistic (this is always a good bet, since 99% of rail projects under-estimate their costs and over-estimate their ridership). The rail line will cost as much to operate as 2/3 of their city's entire bus system, which is extensive and well-used. So how many bus routes will be cut to fund this one route? 10? 30? 70?

By the way, beyond the obvious harm to taxpayers, the other people hurt by this are the poor who are disporportionately bus users. Rail systems almost always go from middle/upper class suburbs to business districts and seldom mirror the transit patterns of the poor. Middle class folks who wouldn't be caught dead on a bus love the trains, but these same folks already have transportation alternatives. The bus lines that get cut to fund the trains almost always serve much lower income folks with fewer alternatives.

For some reason, it appears that building hotels next to city convention centers is a honey pot for politicians. I am not sure why, but my guess is that they spend hundreds of millions or billions on a convention center based on some visitation promises. When those promises don't pan out, politicians blame it on the lack of a hotel, and then use public money for a hotel. When that does not pan out, I am not sure what is next. Probably a sports stadium. Then light rail. Then, ? It just keeps going and going.

The city-owned Sheraton Phoenix Downtown Hotel has lost so much money — more than $28.2 million total — that some city leaders say the hotel must be put in the hands of the private sector.

They also worry that the hotel, Arizona's largest with 1,000 rooms, could harm other projects in the downtown core.

When Phoenix leaders opened the Sheraton in 2008, they proclaimed it would be a cornerstone of downtown's comeback. They had one goal in mind: lure big conventions and tourism dollars. Officials argued the city needed the extra hotel beds to support its massive taxpayer-funded convention center a block away.

The city-owned Hilton Baltimore convention center hotel lost $5.6 million last year — a worse performance than 2013 despite its close location to Camden Yards and the Orioles' playoff run.

It was the seventh consecutive year that the hotel has underperformed financially, according to an audit of financial statements presented Wednesday to the city's Board of Estimates. Under the deal's initial projections, the hotel was supposed to be making $7 million in profit by now — pumping that mone into the city's budget....

The hotel has lost more than $70 million since it opened.

I am sure that politicians in both cities called the lack of a hotel a market failure. But now we see that it was a market success. All the companies who chose not to build a hotel with private money obviously knew what they were doing, and only the political benefits of pandering the the public at large and a few special interests in specific made it seem like an attractive investment to city politicians. Which is all pretty unsurprising, since hotels have pretty much been built off every exit ramp in this country, so there seems to be no private inhibition towards building hotels -- just towards building hotels in bad locations.

These problems are ubiquitous. You can point to any government parks agency, and most any transit agency, and you will find the same problems.

Why? Well, I have not studied the problem in any academic sense, but I am face-to-face with the problem every day in parks.

Let's start with the reason that is not true -- that somehow budgets can't support capital maintenance. I know for a fact that this is not true in parks. We operate over 100 public parks and are totally up to date with all maintenance and have no deferred maintenance backlog. This is despite the fact that we work with only the fees paid by visitors at the gate. Government agencies typically supplement fees at the gate with an equal amount of tax money and still don't keep up with maintenance. So the issue may be costs or priorities, but the money is there to keep parks fixed up. (I am willing to believe the same is not true of large transit projects, but these projects are known in advance not to be able to cover their lifecycle costs with revenues, and simply hide that fact from taxpayers until it is too late. Thus the sales tax increase that is being requested in Phoenix to keep our new light rail running).

I think the cause lies in a couple areas related to government incentives

Legislatures never want to appropriate for capital maintenance. If the legislature somehow has, say, $100 million money it can spend on infrastructure, their incentives are to use it to build new things rather than to keep the old things in repair (e.g. to extend a rail line rather than to keep the old one fixed).

If you want to understand a government agency's behavior, the best rule of thumb is to assume that they are working to maximize the headcount and the payroll budget of their agency. I know that sounds cynical, but if you do not understand an agency's position or priorities, try applying this test: What would the agency be doing or supporting if it were trying to maximize its payroll. You will find this explains a lot

To understand #2, you have to understand that the pay and benefits -- and perhaps most important of all -- the prestige of an agency's leaders is set by its headcount and budgets. Also, there are many lobbying forces that are always trying to pressure an agency, but no group is more ever-present, more ubiquitous, and more vocal than its own staff. Also, since cutting staff is politically always the hardest thing for legislators to do, shifting more of the agency's budget to staff costs helps protect the agency against legislative budget cuts. Non-headcount expenses are raw meat for budget cutters, and the first thing to get swept. By the way, this is not unique to public agencies -- the same occurs in corporations. But corporations, unlike government agencies, face the discipline of markets that places a check on this tendency.

This means that agencies are loath to pay for the outside resources (contractors and materials) that are needed for capital maintenance projects out of their regular budgets. When given the choice of repairing a bathroom at the cost of keeping a staff person, agencies will always want to choose in favor of keeping the staff. They assume capital maintenance can always be done later via special appropriation, but of course we saw earlier that legislators are equally unlikely to prioritize capital maintenance vs. other alternatives.

The other related problem faced is that this focus on internal staff tends to drive up pay and benefits of the agency workers. This drives up the cost of fundamental day to day tasks (like cleaning bathrooms and mowing) and again helps to starve out longer-horizon maintenance functions.

As proof, you only have to look at the mix of agency budgets. Many parks agencies (e.g. New Jersey state parks, which I have studied in depth) have as much as 85% of their budget go to internal staff. My company, which does essentially the same thing (run parks) has about 32% of our budget go to staff. State parks agencies have 50% or more of their staff in headquarters or regional offices. In my company, 99% of the staff is in the parks.

I don't think that these incentives problems can be overcome -- they are simply too fundamental to how government works. Which is why I spend my working hours trying to convince states to privatize the operation of their recreation facilities.

Our great city is proposing to double the sales tax increase dedicated to light rail and make the increase permanent. This all so we can spend more money to shift people from busses to a mode that is more than 10x more expensive per passenger mile.

This is the first even mild questioning of light rail I have seen, and it is certainly welcome. It even acknowledges that the sole advantage of light rail over much more flexible and less expensive buses is that it is more appealing to the middle and upper classes. Via Kevin Drum:

Josh Barro thinks our cities are building too much light rail. It's expensive, often slow, and offers virtually no advantage over simply opening up a bus line. The problem, according to a 2009 report from the Federal Transit Administration, is that "Bus-based public transit in the United States suffers from an image problem."

President Obama wants to spend something like a half trillion incremental dollars on "infrastructure". I have found that these initiatives to sell infrastructure tend to be great bait and switch programs. Infrastructure is generally the one type of government spending that polls well across all parties and demographics. So it is used by government officials to pass big spending increases, but in fact what really happens is that the government takes a wish-list of stuff that most of the public would not be OK with increasing spending on, then they put a few infrastructure projects on top like a cherry to sell the thing. They call it an "infrastructure" program when in fact it is no such thing.

Obama would never do that, right? Hope and change? In fact, he already has. The first time around he sold the stimulus bill as mainly an infrastructure spending bill -- remember all that talk of shovel-ready projects? Only a trivial percentage of that bill was infrastructure. At most 6% was infrastructure, and in practice a lot less since Obama admitted later there were no shovel-ready projects. (also here). The rest of it was mainly stuff like salary support for state government officials. Do you think he would have as easily sold the "wage support for state government officials" bill in the depth of a recession? No way, so he called it, falsely, an infrastructure bill.

The other bait and switch that occurs is within the infrastructure category. We have seen this at the state level in AZ several times. Politicians love light rail, for some reason I do not understand, perhaps because it increases their personal power in a way that individual driving does not. Anyway, they always want money for light rail projects, but bills to fund light rail almost always fail. So they tack on a few highway projects, that people really want, call it a highway bill and pass it that way. But it turns out most of the money is for non-highway stuff. That is the other bait and switch that occurs.

Expect to see both of these with the new infrastructure proposal.

By the way, Randal O'Toole has a nice summary of the drawbacks of light rail and trolley spending

For the past two decades or so, however, much of our transportation spending has focused on infrastructure that is slower, more expensive, less convenient, and often more dangerous than before. Too many cities have given up on trying to relieve congestion. Instead, they have allowed it to grow while they spend transportation dollars (nearly all paid by auto users) on other forms of travel such as rail transit. Such transportation is:

Slower: Where highway speeds even in congested cities average 35 miles per hour or more, the rail transit lines built with federal dollars mostly average 15 to 20 mph.

More expensive: In 2013, Americans auto users spent less than 45 cents per vehicle mile (which means, at average occupanies of 1.67 people per car, about 26 cents per passenger mile), and subsidies to roads average under a penny per passenger mile. By comparison, transit fares are also about 26 cents per passenger mile, but subsidies are 75 cents per passenger mile.

Less convenient: Autos can go door to door, while transit requires people to walk or use other forms of travel, often at both ends of the transit trip.

Less safe: For every billion passenger miles carried, urban auto accidents kill about 5 people, while light rail kills about 12 people and commuter trains kill 9. Only subways and elevateds are marginally safer than auto travel, at 4.5, but we haven’t built many of those lately.

In the Warren Meyer style guide, any phrase like this one -- Why Can't Public Transit Be Free? -- would be reworded "Why Can't Other People Pay For My Transit" so as to be more accurate. Because it clearly can never be free (short of an Iain Banks post-scarcity future world). An even more generic title for this would be "why can't non-users pay for users' services?"

One other thought -- since when did "getting people out of their cars" become the goal of public transit? Is that really a goal worth spending money on? I understand that many transit advocates have this goal nowadays, but in the new systems being built (outside of New York) there is little or no energy reduction in moving people by transit. And the cost per passenger mile of these system is much higher than for building more roads for more cars. And it is no longer about mobility for poorer folks -- new light rails systems cost a fortune, and are built to appeal to professionals and the middle class, while crowding (due to their huge costs) buses that are the traditional source of mobility for the poor.

I get the sense that the argument for transit nowadays is almost aesthetic -- people find cars and roads and suburbs aesthetically distasteful, and want to replace them. That would explain the focus on insanely expensive light rail systems, that look cool, over buses that actually move people for a reasonable cost. I saw a great quote the other day, I wish I can remember who said it. Something like, "Progressives aren't trying to create a rational world, they are trying to create Portland."

update: Thanks to a reader, here is the actual quote (and source): "The goal of progressivism is not to make the world rational; it’s to make the world Portland."

This DOT table, pointed out to me by Randal O'Toole, shows that money spent on highways could be increased immediately by over 30% if highway money was not diverted to transit and other uses. About 13% of state gas tax revenues meant for highways are diverted to non-highway transit projects (e.g. light rail boondoggles). Another 9.4% are diverted to general funds, and may not be applied to transportation projects at all. The same table shows that if all state MVD receipts were used to support investments for cars rather than transit and general spending, money available for roads would increase 45% from those funds.

Transit projects should be supported by their own riders. This will never happen, because they are so egregiously expensive per passenger-mile that no one would ride them if their trip were not subsidized by the rest of us**. And I am exhausted with having folks argue that highways are "subsidized" because they require tax money beyond the gas taxes (which are essentially a user fee) when these extra tax monies for highways would be largely unneeded if the highway funds were used for highways. The diversion to general funds is particularly troubling, since sleazy government officials are obviously trying to piggy-back off the popularity of highway infrastructure investment to generate a slush fund for activities taxpayers are less likely to support.

And please do not tell me that as a highway driver, investments in transit are doing me a favor by getting cars off the road. Transit investments are so expensive per passenger mile that the same money spent getting a few cars off the road via transit would substantially increase road and highway capacities. A dollar of highway investment carries at least an order of magnitude more passenger miles than a dollar of transit spending.

** I am always amazed that supporters of such transit projects call light rail projects "sustainable". Forget for a minute that they seldom use less energy per passenger mile than driving. Think about all the resources that go into them. This at first seems like a hard problem -- how do we account for all the resources that go into transit vs. go into driving. But then we realize it is actually easy, because we have a simple tool for valuing resource inputs: price. Prices are a great miracle. They provide us with a sort of weighted average of the value and scarcity of the resources (both hard, like titanium, and soft, like labor and innovation) that go into a product. So if light rail costs 10x or more per passenger mile than driving, as it often does, this means that it uses ten times the value of resource inputs as driving. This is sustainable? I do not think that word means what you think it means.

I have no evidence that this chart was deliberately manipulated, but somehow the light rail ridership bar for 2014 got exaggerated. It certainly seems suspicious. Light rail ridership went up from 2013 to 2014 by only about 45,000, or 0.3%. This is negligible We should not even see the bar move. Note the total ridership in 2011 and 2010 when ridership fell by 86,000 but the bar lengths are almost indistinguishable. The rail ridership looks to my eye like the bar is 7-9% longer, not 0.3% longer. In fact, the bar for 2014 clearly goes past the halfway point between 10 and 20, despite the fact that 14.3 should be less than halfway. In fact, the 2014 rail increase of 45,000 is graphed as visually larger than the 1.3 million decrease in busses.

You can see a few things. First, note that almost all the rail ridership came at the expense of bus ridership. It was almost a pure 1:1 substitution. The bus ridership, even with a half year of light rail being open, was 65.7 million in 2009. Total ridership was only 67.6 million in 2010 and 2011. Yes there is a recession here, but of the 12 million or so in light rail ridership, at least 10-11 million of that came out of buses. Essentially, we paid $1.4 billion in capital costs to move 10 million riders to a mode of transit that is at least an order of magnitude more expense. Nice work.

Second, note that after over 12 years of growth, with the onset of light rail transit ridership has stagnated for 6 years. Some of this, at least initially, is likely due to the recession but in fact recessions are supposed to spur transit ridership, not reduce it, as people look for lower cost alternatives. There is a good explanation for this. Because light rail is so much more expensive, the cost per rider for the entire transit system has skyrocketed. With budgets unable to be increased this fast (and with fares covering only a tiny percentage of rail costs), the system must cut back somewhere. Since rail can't really be cut back, bus routes are cut.

If we had seen the same growth rate from 2009 to 2014 as we had seen in the twelve years prior, we should have over 86 million trips in 2014 (note these are fiscal years, and fiscal year 2014 is already closed, so this is not partial year data).

We paid, and continue to pay (since rail must be subsidized heavily) billions of dollars to reduce transit ridership.

Last week, Phoenix City Council members approved a deal for the $82 million high-rise, mixed-use Phoenix Central Station. The development at Central Avenue and Van Buren Street will include about 475 apartments and 30,000 square feet of commercial space.

As part of the deal, Phoenix would give the developer, Smith Partners, a controversial tax-abatement incentive called a Government Property Lease Excise Tax for the tower portion of the project. The agreement allows developers to avoid paying certain taxes through deals that title their land or buildings to a government entity with an exclusive right to lease the property back.

In this case, the city already owns the land, but the developer will eventually take title over the building. The arrangement allows them to not pay property taxes for 25 years, which a city official estimates would be $600,000 to $900,000 per year based on conversations with the developer. However, the developer will make smaller lease payments back to the city, and, after eight years, pay taxes on those lease payments.

The agreement requires the developer to pay the city a portion of its revenue, which will net the city an estimated $4.4 million over the first 25 years

The difference from the $4.4 million they will actually pay and 25 years at $750,000 in property taxes is about $10 million (fudging concerns about present value and such). I used to be OK with anything that reduced taxes for anyone, but now I have come to realize that discounting taxes for one preferred crony just raises taxes for the rest of us. [Props to Republican Sal Deciccio for being one of two to vote against this]

Here is my guess as to what is going on here. Phoenix paid a stupid amount of money to build a light rail line that costs orders of magnitude more money than running the same passengers in buses. One of the justifications for this gross over-expenditure on the light rail boondoggle was that it would spur development along the line. But it is not really doing so. Ridership on light rail has been stagnant for years, as has been transit ridership (most of the light rail ridership gains simply cannibalized from bus service, shifting low-cost-to-serve bus riders to high-cost-to-serve train riders).

So they need to be able to show transit-related development to justify future light rail expansions. Thus, this subsidized development along the rail line.

I will make a firm bet. Within 5 years we will have Phoenix politicians touting this development as a result of the light rail investment with nary a mention of the $10 million additional taxpayer subsidy it received.

Arizonans are driving less, and relying more on public transportation, according to a report from the Arizona Public Interest Research Group Education Fund.

The shift is causing the Arizona PIRG Education Fund to recommend that public officials shift funding away from more highway projects, and more toward other transportation options."

"We recommend that transportation officials and elected leaders look at the data today, and not outdated assumptions, to make sure that any highway projects are absolutely necessary," Arizona PIRG Education Fund executive director Diane Brown tells New Times....

In the Phoenix metro area, the light rail opened in late 2008 and is already experiencing ridership numbers that weren't projected to be reached until the year 2020. In 2013, the Valley Metro transit system experienced a record high annual ridership, and between 2007-2013, boardings on Valley Metro transit service jumped from 60 million to more than 75 million - an increase of 25 percent. The Northern Arizona Intergovernmental Public Transportation Authority recently saw its highest monthly ridership in October 2013. And in Yuma, ridership on Yuma County Area Transit has tripled since 2011.

The report suggests that public officials re-allocate their focus and funding, away from building new highways and toward more transportation options.

This is a fantasy.

There is an enormous amount of obfuscation going on here. The percentage rise of public transit trips is actually the miracle of small numbers -- small changes on an even smaller base. The point of these charts is to try to say that Arizonans use a lot of transit and we should dump more billions into these projects. As it turns out, despite all the huge public investment, transit is still a rounding error.

Note that, from their own report, driving vehicle miles per capita are 9175 per person per year. So lets look at transit. They exaggerate by showing averages for Phoenix and Tucson, where transit use is higher, not for the whole state like they show vehicle miles. The total state transit miles per person in the same year, using their numbers, turns out to be as low as 64 (if no one outside of Phoenix or Tucson uses transit) and as high as 110 (if everyone outside of Phoenix and Tucson uses transit at the same rate as in the cities). The likely number is around 75.

This means that after all these billions and billions of transit spending, transit trips are 0.8% of vehicle trips (75 vs. 9175). That is a rounding error. You sure wouldn't get that impression from the report. The Public Interest Research Group has a funny view of "public interest", putting the desired transportation mode of the 0.8% over the desired choice of the 99.2%

Well, you say, I should compare the increase in transit to the decrease in driving. OK. Again using their numbers: Vehicle driving miles went down 348 per capita over the study period. In the same time, per capital transit miles went up by about 26 in Phoenix and Tucson (likely less in the state as a whole). So, at best, transit ridership accounts for about 7% of the drop in driving.

This is not nothing, but hardly justifies the enormous increase in transit spending over the last 15 years and the billions and billions in capital investment.

Oh, and by the way, Phoenix Light Rail ridership has cannibalized bus ridership about 1 for 1. That means all that investment in light rail has just shifted riders to a more expensive, less flexible transit mode. But that is another story.

It turns out that all of the increase in transit ridership took place in New York City. New York City subway and bus ridership grew by 120 million trips in 2013; nationally, transit ridership grew by just 115 million trips. Add in New York commuter trains (Long Island Railroad and Metro North) and New York City transit ridership grew by 123 million trips, which means transit in the rest of the nation declined by 8 million trips. As the New York Timesobserves, the growth in New York City transit ridership resulted from “falling unemployment,” not major capital improvements.

Meanwhile, light-rail and bus ridership both declined in Portland, which is often considered the model for new transit investments. Light-rail ridership grew in Dallas by about 300,000 trips, but bus ridership declined by 1.7 million trips. Charlotte light rail gained 27,000 new rides in 2013, but Charlotte buses lost 476,000 rides. Declines in bus ridership offset part or all of the gains in rail ridership in Chicago, Denver, Salt Lake City, and other cities. Rail ridership declined in Albuquerque, Baltimore, Minneapolis, Sacramento, and on the San Francisco BART system, among other places.

It looks like Chris Christie was doing his part to increase transit ridership in New York.

By the way, the phenomenon of small increases in light rail use offset by large drops in bus ridership is extremely common, almost ubiquitous. Cities build flashy prestige rail projects that cost orders of magnitude more to build and operate than bus service, and are much less flexible when the economy and commuting patterns change. Over time, bus service has to be cut to pay the bills for light rail. But since a given amount of money spent on buses tends to carry more than 10x the passenger miles than the same amount spent on light rail, total ridership drops even while spending rises. That is what is going on here.

Light rail is all about politician prestige, civic pride, and crony favoritism for a few developers with land along the route. It is not about transit sanity.